Why the rich are freaking out

NEW YORK — The co-founder of one the nation’s oldest venture capital firms fears a possible genocide against the wealthy. Residents of Manhattan’s tony Upper East Side say the progressive mayor didn’t plow their streets as a form of frosty revenge. And the co-founder of Home Depot recently warned the Pope to pipe down about economic inequality.

The nation’s wealthiest, denizens of the loftiest slice of the 1 percent, appear to be having a collective meltdown.

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Economists, advisers to the wealthy and the wealthy themselves describe a deep-seated anxiety that the national — and even global — mood is turning against the super-rich in ways that ultimately could prove dangerous and hard to control.

President Barack Obama and the Democrats have pivoted to income inequality ahead of the midterm elections. Pope Francis has strongly warned against the dangers of wealth concentration. And all of this follows the rise of the Occupy movement in 2011 and a bout of bank-bashing populism in the tea party.

The collective result, according to one member of the 1 percent, is a fear that the rich are in deep, deep trouble. Maybe not today but soon.

“You have a bunch of people who see conspiracies everywhere and believe that this inequality issue will quickly turn into serious class warfare,” said this person, who asked not to be identified by name so as not to anger any wealthy friends. “They don’t believe inequality is bad and believe the only way to deal with it is to allow entrepreneurs to have even fewer shackles.”

And so the rich are lashing out.

In the latest example, Thomas Perkins, co-founder of legendary Silicon Valley venture capital firm Kleiner Perkins, wrote a letter to The Wall Street Journal over the weekend comparing Nazi Germany’s persecution and mass murder of Jews to “the progressive war on the American one percent, namely the ‘rich.’”

He went on to say he feared a progressive “Kristallnacht,” referring to the 1938 German pogrom in which nearly 100 Jews were killed and more than 30,000 arrested, a dark omen of the murder of 6 million that would follow.

People, to put it mildly, went nuts.

Even Perkins’s old firm disavowed him and his comments and said he no longer has anything to do with the company. Perkins then went on Bloomberg television, ostensibly to apologize for the remark. But instead he doubled down on the analogy, saying “when you start to use hatred against a minority, it can get out of control.”

Perkins was not the first wealthy investor to invoke Nazi Germany as a warning over current attitudes toward the wealthy. In 2010, when Obama suggested raising the tax on “carried interest” earned by private equity executives, Blackstone CEO Stephen Schwarzman said, “It’s a war. It’s like when Hitler invaded Poland in 1939.”

Obama still hasn’t managed to persuade Congress to hike the 20 percent rate on carried interest even though most on Wall Street expect to lose the perk at some point. Schwarzman eventually apologized for his Hitler remark.

More recently, the New York Post dedicated considerable ink to complaints from residents of the Upper East Side that newly elected progressive mayor Bill de Blasio directed plows to avoid the neighborhood as some kind of revenge for their wealth and support of de Blasio’s opponent.

“He is trying to get us back. He is very divisive and political,” Upper East Side resident Molly Jong Fast told the Post. “By not plowing the Upper East Side, he is saying, ‘I’m not one of them.’”

The mayor dutifully trundled up to the neighborhood to admit mistakes in plowing but strongly denied any ulterior motive.

Ken Langone, a wealthy investor and co-founder of Home Depot, recently told CNBC that the Catholic Church in New York might see a decline in donations if Pope Francis did not tone down his comments about the dangers of economic inequality. “You want to be careful about generalities. Rich people in one country don’t act the same as rich people in another country,” Langone said.

New York Times columnist Paul Krugman this week wrote that even plutocrats who manage not to invoke Nazi Germany “nonetheless hold, and loudly express, political and economic views that combine paranoia and megalomania in equal measure.”

The phenomenon is not limited to the U.S. Bankers across the globe who gathered for the World Economic Forum in Davos, Switzerland, last week complained publicly and privately that in their view vilification of the rich, particularly in the financial industry, has gone far enough.

“Life is hard enough, and I think this constant lecturing on ethics and on integrity by many stakeholders is probably the most frustrating part of the equation. Because I don’t think there are many people who are perfect,” Sergio Ermotti, chief executive of UBS AG, told The Wall Street Journal. “We are far from being perfect … but it’s not going to be very helpful to be constantly bashing banks.”

But perhaps nowhere is the collective freakout more pronounced than the financial capital of the world. Here in New York, even wealthy donors who tend to favor Democrats are deeply concerned about the current political discourse at the city level in which de Blasio wants to increase taxes on the rich, and the national level, in which Democrats have pledged to make the 2014 midterm elections about addressing economic inequality.

“I think this is going to be disastrous for the city,” one top executive at a large Wall Street bank said on the eve of de Blasio’s election. “The people who pay taxes could move out, the businesses could leave. What’s keeping us here?”